NEW DELHI: India’s equity market could witness a rebound this week, as historical data suggests that markets often recover after a steep selling streak.
Domestic brokerage firm Samco Securities noted that there is an 88% probability of a rebound this week. However, global factors, particularly US President Donald Trump’s tariff policy and persistent selling by foreign institutional investors (FIIs), may keep bearish sentiment dominant.
“Historically, after a prolonged losing streak, Nifty 50 tends to recover in the following weeks. The average 1-week forward return is 1.6%, indicating a short-term rebound. Larger declines, such as the -8.19% drop in March 2020, led to extended weakness, with Nifty falling -6.1% in the subsequent week and -31.6% over three weeks.”
“However, most other corrections resulted in a positive return in the following weeks. As of 13 February, 2025, Nifty 50 has undergone a 7-day declining streak with a cumulative fall of -2.98%. Based on historical patterns, the index may have a probability of rebounding over the next few weeks,” said Samco Securities.
In recent instances, when the Nifty 50 index declined by 4.21% after falling for seven sessions between November 7 and November 18, 2024, it rebounded sharply the following week. Its one-week forward return was 3.3%, and the three-week forward return was 5%.
Similarly, an 8-day losing streak in February 2023 resulted in a 4.21% drop in the index, followed by a 2.6% rally the next week. In 2022, the Nifty 50 registered a 7-day falling streak twice, with the index dropping 6.37% in February 2022 and 5.60% in September 2022. The index then recovered 1.5% and 3.1%, respectively, in the following week.
